Energy is a basic human need that must be fulfilled to achieve sustainable development. This kind of development is not possible without energy and policies to meet energy demand. In Cambodia, energy is a critical development challenge. Today, only 35 percent of the total population has access to grid electricity, leaving millions of rural population in the dark. Imported diesel fuel accounts for 90 percent for domestic electricity production. Electricity prices are among the highest in the world.

Energy is a must-have ingredient for development. Without energy, it is not possible to achieve the Millennium Development Goals. But today nearly one in five people around the world do not have access to modern energy services. Nearly 40 percent of the world’s population relies on traditional biomass for cooking and heating which causes lung disease and kills nearly two million people a year, as a result of breathing in toxic smoke.

Hydropower projects have often been reported in the media for causing harm to the environment and community. For example, the Kamchay dam in Kampot was reported to have destroyed 2,000 hectares of productive forest and seriously affected the source of income of the local people. Stung Atay dam in Koh Kong province was also said to have flooded around 5,000 hectares of protected forest in the Phnom Samkok Wildlife Sanctuary and the Cardamom Mountains. Lower Sesan 2 dam in Stung Treng was criticized for displacing some 5,000 families and adversely affecting the livelihoods of 100,000 people who depend on the region’s fisheries.

Cambodia’s energy security is at risk. Insufficient domestic energy production and poor physical infrastructure cause dependency, accessibility, reliability and affordability issues. The country relies almost entirely on the import of fossil fuel, mainly diesel and heavy oil, for electricity production. Apart from Burma, Cambodia has the lowest electrification rate in the region—only 35 percent of its entire population has access to reliable electricity, while its electricity price is one of the highest in the world. This situation has serious implications for Cambodia. Firstly, importing fuel causes high energy costs, which in turn reduces the viability of commercial activities, affects the competitiveness of Cambodian products and hinders the country’s economic growth. Secondly, frequent energy disruption and high electricity prices can spur social unrest.